2011 Annual Report - TOM Group

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68 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2 Financial risk management (Continued) (a) Financial risk factors (Continued) (iii) Cash flow interest rate risk Cash flow interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The key exposure of the Group to this risk originates from the interest-bearing borrowings and interest-bearing bank deposits. Borrowings issued at variable rates and bank deposits placed at variable rates expose the Group to cash flow interest rate risk. At 31 December 2011, if interest rates on all borrowings had been 100 basis points higher/lower with all other variables held constant, pre-tax loss for the year would have been HK$21,319,000 higher/lower (2010: HK$19,514,000 higher/lower on pre-tax loss), mainly as a result of higher/lower interest expense on floating rate borrowings. At 31 December 2011, if interest rates on all interest-bearing bank deposits had been 100 basis points higher/lower with all other variables held constant, pre-tax loss for the year would have been HK$9,639,000 lower/higher (2010: HK$10,814,000 lower/ higher on pre-tax loss) due to higher/lower interest income earned on market interest rates. Management monitors the interest rate risk exposure on a continuous basis and adjusts the portfolio of borrowings where necessary. (iv) Foreign currency risk The Group mainly operates in the Greater China region and is exposed to foreign currency exchange risk arising from various foreign currencies, primarily Renminbi (“RMB”) and New Taiwan dollar (“NT$”). Foreign exchange risk on net investments in foreign currencies is managed primarily through borrowings denominated in the relevant foreign currencies. Since Hong Kong dollar (“HK$”) is pegged to United States dollar (“US$”), management considers that there is no significant foreign currency risk between these two currencies to the Group. A sensitivity review on the foreign currency exposure of HK$/US$ against RMB and NT$ is set out below. TOM Group Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2 Financial risk management (Continued) (a) Financial risk factors (Continued) (iv) Foreign currency risk (Continued) For companies with HK$ as their functional currency At 31 December 2011, if RMB had weakened/strengthened by 5% against HK$ with all other variables held constant, pre-tax loss for those companies for the year would have been HK$11,000 lower/higher (2010: HK$491,000 lower/higher on pre-tax loss), mainly as a result of foreign exchange gains/losses on translation of RMB denominated cash and bank balances, trade and other receivables, and trade and other payables. Loss in 2011 is less sensitive to movement in currency exchange rate than that in 2010 because the amount of RMB denominated trade and other payables held by operating companies in Hong Kong had decreased. For companies with RMB as their functional currency At 31 December 2011, if HK$/US$ had weakened/strengthened by 5% against RMB with all other variables held constant, pre-tax loss for those companies for the year would have been HK$1,388,000 higher/lower (2010: HK$1,638,000 higher/lower on pre-tax loss), mainly as a result of foreign exchange losses/gains on translation of HK$/ US$ denominated cash and bank balances, trade and other receivables, and trade and other payables. Loss in 2011 is less sensitive to movement in currency exchange rate than that in 2010 because the amount of HK$/US$ denominated trade and other receivables and cash and bank balances held by operating companies in the PRC had decreased. For companies with NT$ as their functional currency At 31 December 2011, if HK$/US$ had weakened/strengthened by 5% against NT$ with all other variables held constant, pre-tax profit for those companies for the year would have been HK$32,000 lower/higher (2010: HK$17,000 lower/higher on pre-tax profit), mainly as a result of foreign exchange losses/gains on translation of HK$/US$ denominated cash and bank balances. Profit in 2011 is more sensitive to movement in currency exchange rate than that in 2010 because the amount of HK$/ US$ denominated cash and bank balances held by operating companies in Taiwan had increased. (v) Price risk Management considers that the Group is not subject to any significant price risk. Annual Report 2011 69
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CONTENTS CONTENTS 19 11 21 11 47 37
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2 CORPORATE PROFILE TOM Group Limit
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4 FINANCIAL HIGHLIGHTS For the year
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6 MANAGEMENT’S DISCUSSION AND ANA
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8 MANAGEMENT’S DISCUSSION AND ANA
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10 MANAGEMENT’S DISCUSSION AND AN
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12 DIRECTORS’ PROFILE Ip Tak Chue
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14 CORPORATE GOVERNANCE REPORT The
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16 CORPORATE GOVERNANCE REPORT The
Page 20 and 21: 18 CORPORATE GOVERNANCE REPORT Upon
Page 22 and 23: 20 CORPORATE GOVERNANCE REPORT The
Page 26 and 27: 24 CORPORATE GOVERNANCE REPORT Corp
Page 30 and 31: 28 REPORT OF THE DIRECTORS Director
Page 32 and 33: 30 REPORT OF THE DIRECTORS (e) (f)
Page 34 and 35: 32 REPORT OF THE DIRECTORS Director
Page 36 and 37: 34 REPORT OF THE DIRECTORS Interest
Page 38 and 39: 36 REPORT OF THE DIRECTORS Li Ka-Sh
Page 40 and 41: 38 REPORT OF THE DIRECTORS (d) (e)
Page 42 and 43: 40 REPORT OF THE DIRECTORS During t
Page 44 and 45: 42 INDEPENDENT AUDITOR’S REPORT I
Page 46 and 47: 44 CONSOLIDATED INCOME STATEMENT Fo
Page 48 and 49: 46 CONSOLIDATED STATEMENT OF FINANC
Page 50 and 51: 48 STATEMENT OF FINANCIAL POSITION
Page 52 and 53: 50 CONSOLIDATED STATEMENT OF CHANGE
Page 54 and 55: 52 NOTES TO THE CONSOLIDATED FINANC
Page 102 and 103: 100 NOTES TO THE CONSOLIDATED FINAN
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118 NOTES TO THE CONSOLIDATED FINAN
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Page 126 and 127:
124 PRINCIPAL SUBSIDIARIES, JOINTLY
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2011 Annual Report - TOM Group

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